Ex-Budget Chief Testifies About Kilpatrick Grants

DETROIT (AP) — Michigan's former state budget director told jurors Thursday that she was "angry" when she learned that public grants approved in 2000 at the urging of Kwame Kilpatrick ended up in the hands of the former mayor's wife.

Kilpatrick is on trial for alleged corruption, mostly committed at City Hall from 2002 through 2008, but federal prosecutors turned the clock back further to show questionable deals from when he was a Democratic leader in the Michigan House.

Kilpatrick was able to get grant money for Detroit nonprofit groups when lawmakers passed a budget for arts and community projects in 2000. The government alleges that $37,500 of it was eventually passed from a neighborhood group to Kilpatrick's wife, Carlita Kilpatrick. In 2001, state officials wanted to know more about how the money was spent.

"We were having trouble getting documentation," said Mary Lannoye, who was the state's budget director at the time.

She said Kwame Kilpatrick requested a meeting when officials were holding up more money for the group that had given money to his wife.

"He said he didn't do anything wrong. He was nonchalant," Lannoye said. "I was upset. I was angry at him. These grants were meant to help a local community. … It's his wife. It gives the appearance of impropriety."

Carlita Kilpatrick ran a for-profit organization that promoted peaceful ways to settle conflicts. Kwame Kilpatrick's defense attorney, James Thomas, noted that the lawmaker was never accused of ethics violations over the grants.

At the time, Donna Williams was director of Vanguard Community Development, a community group affiliated with Second Ebenezer Church. She said the group got a $150,000 grant, and she subsequently hired Carlita Kilpatrick at the direction of the pastor, the Rev. Edgar Vann.

"I didn't like the circumstances of her hire, but I liked her," Williams testified.

She said Carlita Kilpatrick didn't provide services that were detailed in an invoice and that Kwame Kilpatrick got upset when Williams showed the paperwork to the state.

Separately, the government alleges that Kwame Kilpatrick's pal Bobby Ferguson got $250,000 from the state for his purported nonprofit. The indictment says $100,000 of that went to Carlita Kilpatrick and another $100,000 was used to renovate Ferguson's office at a construction company.

"I can't think of a circumstance where that would qualify" for a grant to help a community, former state Senate Majority Leader Dan DeGrow told jurors.

Ferguson's lawyer, Susan Van Dusen, suggested the renovations were aimed at creating space in which to train the community.

Kilpatrick, 42, is charged with bribery, fraud, racketeering conspiracy and tax crimes. He's accused of extorting money from people who wanted business from the city when he was mayor and rigging contracts to help Ferguson. Ferguson, Kilpatrick's father and Detroit's former water boss are also on trial.

Kilpatrick, whose mother is former U.S. Rep. Carolyn Cheeks Kilpatrick, was elected mayor in 2001. He resigned in 2008 and pleaded guilty to obstructing justice by lying in a civil case about having sex with an aide. He subsequently served 14 months in prison for violating his probation in that case.